21 Mar Why is transport insurance important?
Transporting your goods from point A to point B is not particularly dangerous, but you never know what can happen during transport in terms of theft, damage or other risks. In order to limit these risks, we recommend preparing your goods carefully and ensuring that they are protected by transport insurance that covers most eventualities.
In this article, our experts in parcel and goods transportation explain more about what transport insurance is and its benefits.
What is transport insurance?
The purpose of transport insurance is to compensate your goods if they are damaged in transit. Transport insurance is a contract between the transport company and the shipper of the goods.
Generally speaking, without transport insurance, your goods are insured by the carrier with a limit set by national and international conventions. This means that when the carrier’s liability is admitted, the amount of compensation may be lower than the value of the damaged or lost goods.
For these reasons, many companies using transport companies take out insurance to guarantee the security (at least financial) of their goods. The type and price of transport insurance will depend on the mode of transport.
Sea freight insurance
In general, sea freight insurance covers the risk of general damage to your goods. This means that if something happens that jeopardizes the safety of the ship and the cargo, requiring some of the goods to be thrown overboard, then you will be compensated.
Some shipping policies will compensate you for specific damages. This covers breakage, loss or theft during the course of the shipment as well as war risks.
Land freight insurance
Depending on the type of road transportation and land transport you choose, there may be more or less risks for your goods. The more load breaks there are between the place of shipment and the delivery destination, the greater the risk of damage to the goods.
It is worth taking out a transport insurance policy for truck transport. Depending on the insurance you choose, it may cover all the damage and circumstances that would lead you to be compensated or it may only cover certain types of damage. It is therefore very important to inquire with a truck transport carrier.
Transport insurance for couriers
Your courier shipments (Canada Post, Purolator, etc.) are generally covered up to $100. If the value of your package exceeds this amount, you will need to indicate how much you want your goods insured for and pay for the additional insurance.
Air freight insurance
Air freight insurance covers property damage and loss that may occur during the journey, but also during pre- and post-transits, whether on land or at sea.
There is a wide range of coverage that you can purchase under air cargo insurance, but those with more limited needs may want to consider more cost-effective coverage.
Incoterms determine whether you need transport insurance
In the world of transportation, there are what are called Incoterms. The International Chamber of Commerce created these terms in order to standardize the obligations and responsibilities of the seller and the buyer during transportation. These terms are used in contracts for the sale or purchase of goods.
Incoterms are one of the factors that will determine whether the buyer or the seller has to take out transport insurance. For the best possible insurance and merchandise security, you should therefore carefully choose the Incoterm to be used in your contracts.
What are the carrier’s responsibilities regarding transport insurance?
The carrier is responsible for the goods entrusted to it, but its liability remains limited in the event of a claim. As mentioned before, the conventions of land, sea and air transport limit the liability of transport companies.
In case of damage, the compensation of the carrier will be based on the weight-volume ratio of your goods or on their weight and not their value. This compensation is also subject to a reimbursement ceiling. In addition, you should be aware that certain factors exonerate carriers from any liability (force majeure, strikes, etc.). This is why it is important to take out transport insurance to limit your possible losses.
In most cases, the contract with your carrier will imply the implicit approval of its conditions of transport, which indicate the limits of its liability and the compensation in case of damage. Be aware of these conditions before entrusting your goods to a carrier.
Contact Transport Econo Nord for more information on transport insurance
As you have seen in this article, transport insurance should not be seen as an additional expense, but as an essential part of your transport strategy.
If you have small shipment volumes, you can ask the transportation company you work with to insure the goods on your behalf. Again, you will need to indicate the amount and pay the cost of this insurance. If you have a large number of shipments, an insurer can offer you transport insurance that is appropriate for your business.
For more information on these types of coverage and to find out what damages are covered by transport insurance, please contact us now! Our truck transportation experts will be happy to answer all your questions.